The consumer price index rose at an annual rate of 6.2% in February, compared to 5.5% in January, making it the largest increase since 1992. This increase can be explained by the surge global prices for energy, oil, food and durable goods. .
Have house prices changed?
The housing boom during the pandemic resulted from stamp duty reductions and a combination of cheap mortgages and a public desire for more space, which sent housing inflation skyrocketing. housing prices.
The average house price in January 2022 was £24,000 higher than the previous year, meaning the average UK house price was £274,000. In England, the average was £292,000.
What is the impact of inflation on land ownership?
Inflation is closely tied to the housing market, says Makala Green, Certified Financial Planner and author of The Money Edit.
“The easiest way to explain is that inflation can affect the overall supply and demand for properties,” she told HuffPost UK. “Where there is increased demand, it can push up house prices and lead to many potential buyers being turned away from buying a property due to a shortage of properties on the market. Alternatively , if there is less demand and more buyers, this will reduce real estate prices.
Soaring house prices make this a tricky time for first-time buyers “who are seeing house prices skyrocket much faster than they can save a down payment,” she adds.
“Existing homeowners are stuck in a crisis situation where even though they can sell for more, the house they want to buy has also increased significantly. In turn, sellers are also affected: they can appear richer on the paper, but can only make gains if they sell or cash in stocks.”
How will inflation affect buying or selling a property?
Gráinne Gilmore, head of research at Zoopla, said: “Economic headwinds, including the rising cost of living, inflation and rising mortgage rates, mean that buyers and movers will pay increased attention the affordability of their new home, both the purchase price, mortgage repayments and running costs.
“Buyer demand is still very high across the UK, with the number of agreed sales in the first quarter above pre-pandemic levels, and we expect the market to remain busy in the months ahead as research space driven by the pandemic continues.”
But as the year progresses, says Gilmore, we should expect buyer demand to moderate to more normal levels, causing house price growth to slow.
So is it the right time to buy or sell?
Those hoping to sell are currently in a strong position, according to Gilmore.
“Buyer demand is unusually high, and homeowners in many parts of the country who are considering relocation will be able to lock in significant gains in their registered home value over the past few years,” she says. “The average house across the UK has grown by more than 20% since 2017.”
Green says it depends on personal circumstances, but it might not be the best time to buy right now. However, she advises you not to wait forever.
“It’s worth continuing to save and not giving up on your real estate dreams. It’s unclear when things might be easier to get on the property ladder, if at all,” she says.
“However, there are options for using government programs, getting a financial boost from lifetime ISAs, clubbing with a partner or friend to buy property, getting bank support from mom and dad, or buying a part of a property, instead of outright.”